Microsoft has not added many new titles to the Xbox Live Arcade recently, and the lack of content has become so noticable, that Peter Moore had to defend it in Edge magazine:
Here’s what happened – people didn’t believe that Arcade was going to fly. So we went round a year and a half ago as we were doing the final plans for launching 360, and told our publishing friends that here’s what we think is really cool idea, where you could make games for hundreds of thousands of dollars instead of tens of millions, and at very low risk, but people didn’t believe it. And we released it and it blew the doors down. Now all of a sudden we’re in this phase where Sega, Namco, Konami, Midway… they want some of that. But we do have an important quality bar in place – we could probably throw 300 games up there quickly, and we are trying to get the independent guys going as well. It’s almost going to be like Pop Idol, where someone will pop out suddenly – Geometry Wars is a great example.
I agree that it is hard to convince developers to start work on something new, but being Microsoft has tons of money, they could have offered more incentives to the developers to make the games, like paying the upfront costs of developing a few games for the Arcade, and taking in the money from purchases on Live.